Naugatuck Expects Loss After Writing Off Loans

Naugatuck Valley Financial (NVSL) in Connecticut is expecting to record its third consecutive quarterly loss after writing down roughly $5.3 million on five loans during the current quarter.

The writedown, which is a noncash charge, relates to five previously classified commercial loans in the bank's portfolio that had an aggregate carrying value of about $11.4 million at June 30.

The $558 million-asset company said Monday that it expects to record a provision for loan losses at least equal to the writedown amount during the quarter that will end Sept. 30 to replenish its allowance for loan losses. At June 30 its allowance was $8.4 million.

Naugatuck swung to a loss in the quarter that ended March 31 after recording an $800,000 charge to cover interest owed to customers whose CDs had automatically been renewed at a time when it was offering promotional interest rates. The company lost roughly $1.7 million in the first six months of the year; it reported a profit of $901,000 for the year-earlier period.